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Lý Thuyết Trò Chơi Trong Kinh Doanh
Nhà kinh doanh thường bị ám ảnh bởi câu châm ngôn: "Thương trường là chiến trường". Theo đó, sẽ luôn có người thắng kẻ bại, bởi ta chỉ thành công chưa đủ, phải làm sao cho kẻ khác thất bại. Thế nhưng nhà tài phiệt ngân hàng đầu thế kỷ XX, Bernard Baruch lại khuyên mọi người: "không cần phải thổi tắt ngọn nến của người khác để mình tỏa sáng".
Kinh doanh là hợp tác khi cần tạo ra chiếc bánh thị trường, nhưng sẽ là cạnh tranh khi đến lúc chia phần chiếc bánh đó. Nó không chỉ đơn thuần là chiến trường, nó là một cuộc chơi. Không nhất thiết thắng - bại rạch ròi mà có khi cùng thắng, có khi cùng thua. Vấn đề ở chỗ ta phải nhận diện, phân loại người chơi, tùy nghi ứng xử để có quyền lực mạnh nhất trong cuộc chơi. Lý thuyết trò chơi trong kinh doanh hóa giải những điều vừa nêu, làm biến chuyển hoàn toàn cách cảm và nghĩ của mọi người, trở thành công cụ hữu hiệu để bước vào kỷ nguyên hội nhập, toàn cầu hóa kinh tế. Vì thế, năm 1994, ba nhà tiên phong trong lý thuyết trò chơi là John Nash, John Harsanyi và Reihart Selten đã được nhận giải thưởng Nobel kinh tế.
Kinh doanh là hợp tác khi cần tạo ra chiếc bánh thị trường, nhưng sẽ là cạnh tranh khi đến lúc chia phần chiếc bánh đó. Nó không chỉ đơn thuần là chiến trường, nó là một cuộc chơi. Không nhất thiết thắng - bại rạch ròi mà có khi cùng thắng, có khi cùng thua. Vấn đề ở chỗ ta phải nhận diện, phân loại người chơi, tùy nghi ứng xử để có quyền lực mạnh nhất trong cuộc chơi. Lý thuyết trò chơi trong kinh doanh hóa giải những điều vừa nêu, làm biến chuyển hoàn toàn cách cảm và nghĩ của mọi người, trở thành công cụ hữu hiệu để bước vào kỷ nguyên hội nhập, toàn cầu hóa kinh tế. Vì thế, năm 1994, ba nhà tiên phong trong lý thuyết trò chơi là John Nash, John Harsanyi và Reihart Selten đã được nhận giải thưởng Nobel kinh tế.
448 pages, Paperback
First published May 1, 1996
132 people are currently reading
1984 people want to read
About the author
Adam M. Brandenburger
5 books15 followersAdam Brandenburger is the Vice Dean for Graduate Education and the J.P. Valles Professor at the Stern School of Business at New York University. Prior to joining Stern, he held the M.B.A. Class of 1958 Professorship at Harvard Business School.
Adam is an authority on game theory and its application to business strategy, and teaches an MBA course on this subject. He was voted NYU Stern M.B.A. Professor of the Year in 2006. His book Co-opetition (with Barry Nalebuff, Doubleday, 1996) is used by businesses as a guide to strategy in the information economy, and has been translated into more than a dozen languages.
Born in London, England, Adam received his B.A., M.Phil., and Ph.D. degrees from the University of Cambridge.
Adam is an authority on game theory and its application to business strategy, and teaches an MBA course on this subject. He was voted NYU Stern M.B.A. Professor of the Year in 2006. His book Co-opetition (with Barry Nalebuff, Doubleday, 1996) is used by businesses as a guide to strategy in the information economy, and has been translated into more than a dozen languages.
Born in London, England, Adam received his B.A., M.Phil., and Ph.D. degrees from the University of Cambridge.
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December 9, 2021What this book is about?
It is about strategy. It is about how to design a strategy.
Imagine a game that this books starts with:
No. of cards in a standard deck of cards = 52
No. of black cards = 26
No. of red cards = 26
Game:
You are given 26 black cards to keep.
The 26 red cards, you must convince 26 other students to cooperate with you individually so that they each agree to go and claim $100 per pair with the dean.
However you must tell them that by cooperating, you will get $100.
Possible outcomes:
The best outcome is that you convince all 26 students and thus the total income = 26 x 100 = $2,600.
However students are not fools. They will not cooperate knowing you will get $100, without expecting to get something. But since you are the one who directly collects the $100 per pair from the dean, you have more bargaining power, a kind of monopoly. Still if they don’t cooperate, you too get nothing. So the second best outcome is to give them $10 each and you keep $90. Thus your total income = 26x90 = $2,340. It is less than expected but then it is still good.
But students are ‘fair’ loving creatures. They would rather have ‘no deal’ than to be unfairly treated with a 10% cut in a deal that they know their added value is 50% . Thus you total income = 26 x 50 = $1,300
This example is very popular in the game theory circle.
This book offers us a framework to design strategies to do better in any game theory situations and all business problems and many life problems can be converted to a game theory structure.
PARTS Framework for strategy design
First you must define the problem as we did above for the cards game.
P for Players: then you must define the players. The writers use this framework to summarize the players as below:
This is in contrast and comparison to the very famous 5 forces of Micheal Porter:
Basically before you design your strategy you must decide whom it is intended to act upon most, second and collaterally.
A for added value : a strategy is a set of actions we take as individuals or an organization. What this “A” component is saying is that whatever we do, it must add value to all or any of the above players to be a sustainable strategy. If not no matter how much money you spend on it, it will fail.
Added value = value of the pie after you leave the game - value of the pie before you joined the game
R for rules : Every game has rules that existed before you joined. So your strategy cannot ignore these rules. Rules can be defined or undefined. You have to pay VAT is defined rule as well as you have to get a license. But you cannot sell in area A and B because of the syndicate, is undefined rule as well as customers expect a 60 day credit period. However your strategy can compel for rules to be changed.
T for tactics : in this framework, tactics mean actions that will change the perception of one or more of the players. So your strategy must have tactical element like in “Desert Storm” during Bush administration, the strategy consisted of dropping off pamphlets from US airplanes in Iraq reading roughly, “Surrender as you have no chance to win and we will spare you.” So yes, tactics are more psychological in nature although means may be physical, communication or abstract.
S for Scope: this one is dealing the the multiple rounds in game theory. What this element says is that your strategy cannot be designed in the vacuum of time. You can have a winning strategy but it can cost you dearly in the next round. It is the systemization of the age old wisdom, “it is better to lose battle, and win the war than win the battle and lose the war.”
The writers give plenty of examples of real life businesses to illustrate each point but I will omit in this review because most of them will not help the first time reader understand this utterly important PARTS framework.
Closing with the card game
Now that you know the PARTS framework, what strategy would help you earn more that $1,300 in the above game?
Players are:
You
students
dean
Added value
Every one is better off with “a deal” than “no deal”
Rules
Explained earlier
Tactics
The problem is here. What strategy will make the students accept a lower price than $50 and still think they are so lucky and not hate you for that?
Scope
Of course you could show them the gun or threaten them or promise them future income, but the scope will be that you:
Will got to jail
Will lose friends
Will make enemies
students will not play with you again
Writer’s strategy
The writer conveniently lost 3 black cards. So now,
No. of black cards = 23
No. of red cards = 26
No. of students = 26
No. of potential deals = 23
No. of students that will be left with ‘no deal’ by design = 3
So cleverly by not changing any players, and rules, this strategy is a powerful tactic that forces the students to ‘not want to be the 3 with $0”.
Now you can ask for $80 and give them $20, and they will happily oblige and even be grateful that you gave them the opportunity. The concept of being “unfairly” will not occur to the students.
Now you income = 23 * 80 = 1,840
This is a (1,840 - 1,300)/1,300 = 41.5% better than if you had no strategy and played by the rules alone!
How is it useful to you in your :
Life
x
Business
I have used this PARTS framework with most of my consulting clients and it is essential to come with a real strategy that really works.
Before PARTS framework , we had to rely only
SWOT analysis
Scenario Analysis
Fishbone Analysis
Cause effect Analysis
Some others that come in fashion and then out of fashion
To design strategies
This framework does what Newton’s 3 laws to to designing rockets and bridges , to help us design strategies. For me I use three frameworks to design , analyse and evaluate strategies:
SWOT analysis - it is super simple but highly effective framework to explain current outcomes and forecast outcomes of any proposed outcomes
PARTS analysis - now this gets professional. Using various case studies, and doing lateral thinking, many strategies are postulated and all measured againsts PARTS framework.
Scenario analysis - Finally the best strategies are put in multiple scenarios. Most work is done mentally and in coaching sessions but it is advisable to design macrocosm in spreadsheets. It is not that tough, all you need is to quantify your thoughts.
Career
Since careers are similar to businesses in many ways, what I said above about businesses is applicable to careers as well.
The tactical objective “T” is how to make your boss (P) think you are indispensable and that you deserve the highest possible raise without breaking rule “R” and not turning off all your colleagues “S” as well as adding value to the business “A”.
It is about strategy. It is about how to design a strategy.
Imagine a game that this books starts with:
No. of cards in a standard deck of cards = 52
No. of black cards = 26
No. of red cards = 26
Game:
You are given 26 black cards to keep.
The 26 red cards, you must convince 26 other students to cooperate with you individually so that they each agree to go and claim $100 per pair with the dean.
However you must tell them that by cooperating, you will get $100.
Possible outcomes:
The best outcome is that you convince all 26 students and thus the total income = 26 x 100 = $2,600.
However students are not fools. They will not cooperate knowing you will get $100, without expecting to get something. But since you are the one who directly collects the $100 per pair from the dean, you have more bargaining power, a kind of monopoly. Still if they don’t cooperate, you too get nothing. So the second best outcome is to give them $10 each and you keep $90. Thus your total income = 26x90 = $2,340. It is less than expected but then it is still good.
But students are ‘fair’ loving creatures. They would rather have ‘no deal’ than to be unfairly treated with a 10% cut in a deal that they know their added value is 50% . Thus you total income = 26 x 50 = $1,300
This example is very popular in the game theory circle.
This book offers us a framework to design strategies to do better in any game theory situations and all business problems and many life problems can be converted to a game theory structure.
PARTS Framework for strategy design
First you must define the problem as we did above for the cards game.
P for Players: then you must define the players. The writers use this framework to summarize the players as below:
This is in contrast and comparison to the very famous 5 forces of Micheal Porter:
Basically before you design your strategy you must decide whom it is intended to act upon most, second and collaterally.
A for added value : a strategy is a set of actions we take as individuals or an organization. What this “A” component is saying is that whatever we do, it must add value to all or any of the above players to be a sustainable strategy. If not no matter how much money you spend on it, it will fail.
Added value = value of the pie after you leave the game - value of the pie before you joined the game
R for rules : Every game has rules that existed before you joined. So your strategy cannot ignore these rules. Rules can be defined or undefined. You have to pay VAT is defined rule as well as you have to get a license. But you cannot sell in area A and B because of the syndicate, is undefined rule as well as customers expect a 60 day credit period. However your strategy can compel for rules to be changed.
T for tactics : in this framework, tactics mean actions that will change the perception of one or more of the players. So your strategy must have tactical element like in “Desert Storm” during Bush administration, the strategy consisted of dropping off pamphlets from US airplanes in Iraq reading roughly, “Surrender as you have no chance to win and we will spare you.” So yes, tactics are more psychological in nature although means may be physical, communication or abstract.
S for Scope: this one is dealing the the multiple rounds in game theory. What this element says is that your strategy cannot be designed in the vacuum of time. You can have a winning strategy but it can cost you dearly in the next round. It is the systemization of the age old wisdom, “it is better to lose battle, and win the war than win the battle and lose the war.”
The writers give plenty of examples of real life businesses to illustrate each point but I will omit in this review because most of them will not help the first time reader understand this utterly important PARTS framework.
Closing with the card game
Now that you know the PARTS framework, what strategy would help you earn more that $1,300 in the above game?
Players are:
You
students
dean
Added value
Every one is better off with “a deal” than “no deal”
Rules
Explained earlier
Tactics
The problem is here. What strategy will make the students accept a lower price than $50 and still think they are so lucky and not hate you for that?
Scope
Of course you could show them the gun or threaten them or promise them future income, but the scope will be that you:
Will got to jail
Will lose friends
Will make enemies
students will not play with you again
Writer’s strategy
The writer conveniently lost 3 black cards. So now,
No. of black cards = 23
No. of red cards = 26
No. of students = 26
No. of potential deals = 23
No. of students that will be left with ‘no deal’ by design = 3
So cleverly by not changing any players, and rules, this strategy is a powerful tactic that forces the students to ‘not want to be the 3 with $0”.
Now you can ask for $80 and give them $20, and they will happily oblige and even be grateful that you gave them the opportunity. The concept of being “unfairly” will not occur to the students.
Now you income = 23 * 80 = 1,840
This is a (1,840 - 1,300)/1,300 = 41.5% better than if you had no strategy and played by the rules alone!
How is it useful to you in your :
Life
x
Business
I have used this PARTS framework with most of my consulting clients and it is essential to come with a real strategy that really works.
Before PARTS framework , we had to rely only
SWOT analysis
Scenario Analysis
Fishbone Analysis
Cause effect Analysis
Some others that come in fashion and then out of fashion
To design strategies
This framework does what Newton’s 3 laws to to designing rockets and bridges , to help us design strategies. For me I use three frameworks to design , analyse and evaluate strategies:
SWOT analysis - it is super simple but highly effective framework to explain current outcomes and forecast outcomes of any proposed outcomes
PARTS analysis - now this gets professional. Using various case studies, and doing lateral thinking, many strategies are postulated and all measured againsts PARTS framework.
Scenario analysis - Finally the best strategies are put in multiple scenarios. Most work is done mentally and in coaching sessions but it is advisable to design macrocosm in spreadsheets. It is not that tough, all you need is to quantify your thoughts.
Career
Since careers are similar to businesses in many ways, what I said above about businesses is applicable to careers as well.
The tactical objective “T” is how to make your boss (P) think you are indispensable and that you deserve the highest possible raise without breaking rule “R” and not turning off all your colleagues “S” as well as adding value to the business “A”.
September 8, 2015
Lý thuyết trò chơi được minh họa lại bằng câu chuyện ván bài Barry
Barry cầm 26 lá bài đỏ, mỗi một 26 sinh viên cầm mỗi là bài đen.
Cứ mỗi cặp đỏ đen bất kỳ thì được 100 đô. Thương lượng thế nào đây? Tỷ lệ 50/50 hay 80/20...
Nếu Barry đánh mất 3 lá bài thì vị thế thương lượng sẽ thế nào?
Trò chơi "lá bài" dẫn vào một khái niệm trong lý thuyết trò chơi là MẠNG GIÁ TRỊ. Một cách tổng quát để nhìn một cuộc chơi trong kinh doanh là: khách hàng đối xứng nhà cung cấp, người bổ trợ đối xứng với đối thủ.
So với mô hình 5 áp lực cạnh tranh của Michael Porter và mô hình MẠNG GIÁ TRỊ của lý thuyết trò chơi thì có một vài điểm khác biệt: Mô hình FIVE FORCES thì không có NGƯỜI BỔ TRỢ, song lại có đối thủ thay thế, đối thủ tiềm tàng.
Để hiểu hơn về MẠNG GIÁ TRỊ, tác giả đưa ra công cụ PARTS
(1) Người chơi: nhớ rằng mỗi khi thêm người chơi, MẠNG GIÁ TRỊ sẽ hoàn toàn khác, vị thế sẽ cực kỳ khác. (mất đi 1 lá bài)
(2) Giá trị gia tăng:
(3) Quy tắc: nổi bật là MCC và MFC, quy tắc khớp giá đối thủ.
(4) Chiến thuật
(5) Phạm vi
Nói chung phần này bổ trợ về cách chơi trong 1 cuộc chơi.
Nhìn chung, thấy cuốn này khá "tệ", những điều thú vị nằm trọn ở phần đầu là MẠNG GIÁ TRỊ, càng về sau chán như quỷ.
Barry cầm 26 lá bài đỏ, mỗi một 26 sinh viên cầm mỗi là bài đen.
Cứ mỗi cặp đỏ đen bất kỳ thì được 100 đô. Thương lượng thế nào đây? Tỷ lệ 50/50 hay 80/20...
Nếu Barry đánh mất 3 lá bài thì vị thế thương lượng sẽ thế nào?
Trò chơi "lá bài" dẫn vào một khái niệm trong lý thuyết trò chơi là MẠNG GIÁ TRỊ. Một cách tổng quát để nhìn một cuộc chơi trong kinh doanh là: khách hàng đối xứng nhà cung cấp, người bổ trợ đối xứng với đối thủ.
So với mô hình 5 áp lực cạnh tranh của Michael Porter và mô hình MẠNG GIÁ TRỊ của lý thuyết trò chơi thì có một vài điểm khác biệt: Mô hình FIVE FORCES thì không có NGƯỜI BỔ TRỢ, song lại có đối thủ thay thế, đối thủ tiềm tàng.
Để hiểu hơn về MẠNG GIÁ TRỊ, tác giả đưa ra công cụ PARTS
(1) Người chơi: nhớ rằng mỗi khi thêm người chơi, MẠNG GIÁ TRỊ sẽ hoàn toàn khác, vị thế sẽ cực kỳ khác. (mất đi 1 lá bài)
(2) Giá trị gia tăng:
(3) Quy tắc: nổi bật là MCC và MFC, quy tắc khớp giá đối thủ.
(4) Chiến thuật
(5) Phạm vi
Nói chung phần này bổ trợ về cách chơi trong 1 cuộc chơi.
Nhìn chung, thấy cuốn này khá "tệ", những điều thú vị nằm trọn ở phần đầu là MẠNG GIÁ TRỊ, càng về sau chán như quỷ.
September 14, 2016
提出PARTS方式以新的角度分析市場，令人驚艷，往往會有意想不到的想法產生
Participants: 誰是參賽者？在每一賽局中，各成員的角色扮演為何
Added-value: 如何創造自己與其他參賽者附加價值，或是能否在現有賽局中創造新價值
Ruls: 現有遊戲規則為何？對本身優缺為何？能否建立新規則；
Tactics: 戰術與手段，如何玩此賽局，此賽局中其他參與者之策略與戰略
Scopes: 現有賽局範圍為何，需要更改舊賽局範圍或是新增賽局等
Participants: 誰是參賽者？在每一賽局中，各成員的角色扮演為何
Added-value: 如何創造自己與其他參賽者附加價值，或是能否在現有賽局中創造新價值
Ruls: 現有遊戲規則為何？對本身優缺為何？能否建立新規則；
Tactics: 戰術與手段，如何玩此賽局，此賽局中其他參與者之策略與戰略
Scopes: 現有賽局範圍為何，需要更改舊賽局範圍或是新增賽局等
May 25, 2020
The examples are dated to the '80's and '90's, but the PARTS model and game theory concepts articulated in this book are still quite accessible and still useful. I found the font choice for the book odd.
June 5, 2008
As someone working on an MBA, this book fascinated me. Real life examples, albeit huge corporations, showed how thinking outside the box helped them not only survive in tough times, but thrive. I've long felt there was a more humane approach to business than being cutthroat towards the competition. This book validates what I've practiced in 20 years of business--be as good to the other guy as you are to yourself.
January 22, 2020
A great business book for many reasons. First, the underplaying PARTS system helps seeing things differently while being pragmatic still. Second, the writing style forces you to think strategically and not reactively (I got many interesting thoughts for my own field of work). Third, while I do not like case studies as proof (they stay anecdotal) they make good explanation marks on the details.
July 7, 2009
While in business school, I asked an econ professor for a recommendation on further game theory readings; he pointed me to this book. It was easy to read and highly informative. (It also helped secure a top grade on a strategy paper!) I plan to read it again.
November 16, 2020
I like this book for two reasons: 1. It’s my first book introducing the concept of game theory, and 2. It categorizes the elements that involve in the heated environment and that shape the dynamics: player, added value, scope, rules, and tactics.
However, I didn’t give it a high enough rating, because I would say it’s probably 1. Not intellectually stimulating enough, as many facts stated are pretty easy to see everywhere, and 2. I guess I’m not holding the personality to calculate the wins and losses, and I don’t like thinking too much of that. I’ve been treated with kindness and generosity—things that can never exist if I have a mindset of game theory constantly in mind. If game theory (all parties get roughly fair things for exchange) is prevalent everywhere, I have to be guilty and apologize to everyone that I couldn’t give some very many valuables in return. As a result, the equilibrium told me that I hope to be supportive, and be loving to as many kind and good people I’m capable of, and just to pass along the unconditional and unweavering love and support I’ve been getting all these years.
However, I didn’t give it a high enough rating, because I would say it’s probably 1. Not intellectually stimulating enough, as many facts stated are pretty easy to see everywhere, and 2. I guess I’m not holding the personality to calculate the wins and losses, and I don’t like thinking too much of that. I’ve been treated with kindness and generosity—things that can never exist if I have a mindset of game theory constantly in mind. If game theory (all parties get roughly fair things for exchange) is prevalent everywhere, I have to be guilty and apologize to everyone that I couldn’t give some very many valuables in return. As a result, the equilibrium told me that I hope to be supportive, and be loving to as many kind and good people I’m capable of, and just to pass along the unconditional and unweavering love and support I’ve been getting all these years.
September 18, 2024
Ce livre a été publié en 1996 et le cadre théorique qu'il contient devait être à l'époque incroyable. Aujourd'hui, les modèles d'affaires des entreprises ont évolué.
Pour connaître la théorie, je vous invite à lire la page Wikipédia, plus rapide à lire : https://fr.wikipedia.org/wiki/La_Co-o....
extrait : "Le texte traite de cette notion de coopétition, une stratégie d'entreprise forgée à partir de la théorie des jeux pour démontrer quand il est préférable pour les concurrents de travailler ensemble plutôt que d'entrer en conflit les uns avec les autres. Les auteurs s'appuient sur de nombreux exemples pour montrer l'interaction simultanée entre concurrence et coopération2. Leur recherche apportait à l'époque de nouvelles idées par rapport à la précédente analyse de l'industrie tels que le modèle des cinq forces de Michael Porter, qui se préoccupe presque exclusivement de la concurrence."
Pour connaître la théorie, je vous invite à lire la page Wikipédia, plus rapide à lire : https://fr.wikipedia.org/wiki/La_Co-o....
extrait : "Le texte traite de cette notion de coopétition, une stratégie d'entreprise forgée à partir de la théorie des jeux pour démontrer quand il est préférable pour les concurrents de travailler ensemble plutôt que d'entrer en conflit les uns avec les autres. Les auteurs s'appuient sur de nombreux exemples pour montrer l'interaction simultanée entre concurrence et coopération2. Leur recherche apportait à l'époque de nouvelles idées par rapport à la précédente analyse de l'industrie tels que le modèle des cinq forces de Michael Porter, qui se préoccupe presque exclusivement de la concurrence."
March 28, 2021
Honestly, probably one of the best business books I’ve read. Co-opetition provided a strong, clear model to follow, the examples made sense in context, and it did not give the impression of being written by the word—it said what it needed to say and stopped. I really appreciated how it gave so many insights into different aspects of business—operations, contracts, negotiations and more—I honestly may have learned more about business in this book than my time at business school.
The Value Net and PARTS model was a valuable insight—I will need to think a bit more about if/how it related to the nonprofit sector
The Value Net and PARTS model was a valuable insight—I will need to think a bit more about if/how it related to the nonprofit sector
May 22, 2024
The authors draw from game theory to formulate strategies that leverage business relationships effectively. Through real-world examples, including companies like Intel, Nintendo, and American Express, they demonstrate how co-opetition can lead to high profits and innovative solutions.
Co-Opetition is a must-read for managers seeking to shift their mindset and navigate the complexities of today’s global business landscape. It’s a refreshing departure from the traditional winner-takes-all mentality, emphasizing the power of strategic collaboration.
Co-Opetition is a must-read for managers seeking to shift their mindset and navigate the complexities of today’s global business landscape. It’s a refreshing departure from the traditional winner-takes-all mentality, emphasizing the power of strategic collaboration.
October 23, 2017
Easy an practical approach of game theory in business and life.
August 2, 2018
The book gives you concept of business model from 0 to 1
March 21, 2019
It provides a good framework and toolkit for business leaders when it comes to bloody business competitions.
September 5, 2020
Mở mang! Hay sao ít người biết quá.
January 2, 2020
A great introduction to Game Theory and managerial economics
April 28, 2015
The book briefly introduces an important concept of complementers (those firms whose products enhance demand for yours -- grills and hot dogs, Intel and Microsoft). The book then spends the bulk on applied game theory -- focusing on how profits are divided amongst firms.
Although the two parts are fairly disconnected, both are highly worthwhile.
The game theory part has many not-too-intuitive, although classical, observations -- for instance, how most favored customer (MFC) clause, which grants a given customer lowest price of any customers, actually serves the suppliers by deterring price concessions.
At the same time, it is tempting for any given buyer to accept an MFC clause, since their concerns may be to have pricing that is not worse than that available to a competitor (those incentives are particularly strong for the specific buyer agent employed by the customer).
Another interesting game theoretic development discussed is airline loyalty programs. Incidentally, airlines are such a tough industry that they seem to have pioneered a lot of innovations around deterring and abating price wars (although the industry remains challenged). Anyhow, loyalty programs effectively partition the customers into quasi-monopolies, ie make demand less elastic, tilting incentives towards raising prices. Of course, any carefully constructed oligopoly with a high margin above variable cost becomes more fragile -- for example it is vulnerable to a new entrant, or to a breakout of a severe price war.
Written in mid-1990s, the book still reads fresh. The history of Nintendo dominance of 8-bit video games, and then Sega's "judo" entry into the 16-bit arena is very helpful, and fills out Christensen's picture of disruptive innovation by taking a closer look at incentives of the incumbents and specific details of how they can be turned into weaknesses by careful entry and positioning of the entry from price and volume perspective. Similarly for Softsoap successfully disrupting a chunk of the bar soap market, and incumbents' reluctance to risk their brand on what effectively be a highly cannibalistic category which might fade on its own.
One more example: as a buyer choosing between two equally appealing suppliers, should one opt for a short term contract, renegotiated every year, or one long term contract? My initial reaction was that optionality can be valuable. But, there is a counter to that -- if you are in a position of strength currently, you might want to lock it in with a longer term contract. Even more importantly, extending it in time extends total volume being negotiated, often making bidding more aggressive -- and bidders perhaps willing to take bigger risks of retaliation in other competitions if this is a particularly do-or-die one for them.
Yet one more interesting observation spelled out in the book was the appeal of bundle discounts. Basically, by offering a nontransferable discount for two items -- for instance two movies -- being bought together, one is able to target a larger portion of lukewarm buyers for the two items, without giving up pricing to the devotees of one item only.
Anyhow, in understanding and valuing a business, it is pretty clear that it's important to assess both the leverage this business has in the marketplace, and its cleverness and ability in using this strength (as, for instance, Marcchioni of Fiat has demonstrated in acquiring Chrysler). This book lifts the curtain on a lot of the thinking involved, and gives examples of both effective and ineffective moves in real business situations.
Well worth reading to deepen one's appreciation of the forces behind business negotiations, market entry and entry deterrence, and reasoning about price wars and their deterrence. Five stars.
Although the two parts are fairly disconnected, both are highly worthwhile.
The game theory part has many not-too-intuitive, although classical, observations -- for instance, how most favored customer (MFC) clause, which grants a given customer lowest price of any customers, actually serves the suppliers by deterring price concessions.
At the same time, it is tempting for any given buyer to accept an MFC clause, since their concerns may be to have pricing that is not worse than that available to a competitor (those incentives are particularly strong for the specific buyer agent employed by the customer).
Another interesting game theoretic development discussed is airline loyalty programs. Incidentally, airlines are such a tough industry that they seem to have pioneered a lot of innovations around deterring and abating price wars (although the industry remains challenged). Anyhow, loyalty programs effectively partition the customers into quasi-monopolies, ie make demand less elastic, tilting incentives towards raising prices. Of course, any carefully constructed oligopoly with a high margin above variable cost becomes more fragile -- for example it is vulnerable to a new entrant, or to a breakout of a severe price war.
Written in mid-1990s, the book still reads fresh. The history of Nintendo dominance of 8-bit video games, and then Sega's "judo" entry into the 16-bit arena is very helpful, and fills out Christensen's picture of disruptive innovation by taking a closer look at incentives of the incumbents and specific details of how they can be turned into weaknesses by careful entry and positioning of the entry from price and volume perspective. Similarly for Softsoap successfully disrupting a chunk of the bar soap market, and incumbents' reluctance to risk their brand on what effectively be a highly cannibalistic category which might fade on its own.
One more example: as a buyer choosing between two equally appealing suppliers, should one opt for a short term contract, renegotiated every year, or one long term contract? My initial reaction was that optionality can be valuable. But, there is a counter to that -- if you are in a position of strength currently, you might want to lock it in with a longer term contract. Even more importantly, extending it in time extends total volume being negotiated, often making bidding more aggressive -- and bidders perhaps willing to take bigger risks of retaliation in other competitions if this is a particularly do-or-die one for them.
Yet one more interesting observation spelled out in the book was the appeal of bundle discounts. Basically, by offering a nontransferable discount for two items -- for instance two movies -- being bought together, one is able to target a larger portion of lukewarm buyers for the two items, without giving up pricing to the devotees of one item only.
Anyhow, in understanding and valuing a business, it is pretty clear that it's important to assess both the leverage this business has in the marketplace, and its cleverness and ability in using this strength (as, for instance, Marcchioni of Fiat has demonstrated in acquiring Chrysler). This book lifts the curtain on a lot of the thinking involved, and gives examples of both effective and ineffective moves in real business situations.
Well worth reading to deepen one's appreciation of the forces behind business negotiations, market entry and entry deterrence, and reasoning about price wars and their deterrence. Five stars.
October 3, 2011
What Game Theory has to offer in Business...
...is on the most pressing issues of it all: finding the right strategies and making the right decisions. Maybe a missed a lot on business education, but i never thought of complements. Or the effect of myself entering a market or not having an impact on the whole game. Not even in my MBA did we cover such profounde topic. The authors cover very well the ground of Game Theory applied to business and how companies cooperate in order to enlarge a market and that compete in splitting the market share. Very readable book, even though it gets a bit boring after reading half through.
...is on the most pressing issues of it all: finding the right strategies and making the right decisions. Maybe a missed a lot on business education, but i never thought of complements. Or the effect of myself entering a market or not having an impact on the whole game. Not even in my MBA did we cover such profounde topic. The authors cover very well the ground of Game Theory applied to business and how companies cooperate in order to enlarge a market and that compete in splitting the market share. Very readable book, even though it gets a bit boring after reading half through.
June 27, 2012
Prof. Nalebuff assigned the first 100 pages or so for our class and I'm pretty happy to have finished up the rest. While I don't think your average business case has as much game theory application as the examples illustrated in Co-Opetition, that's in part what makes the book worthwhile - it seems to cull from the most interesting strategic cases available. In fact, I'd be even be curious to see what new cases from the last 15 years could be brought into a second edition.
September 15, 2011
Easy read. Practical in most of the sense. However, the business world would have to evolve around this way of thinking to become validated totally. Yes, I gleened much in the way of helping myself, my team and even how to lead others to evolve to this paradigm to some means. However, we can't control others and I have been personal witness and victim to the theory that the world out there is live or let die.
November 10, 2011
This book provides a model to apply game theory to business. It's a good model, but often the case studies make is seem as if business situations can only be handled by someone who has an intuitive grasp of game theory, not an understanding that can be learned from this book or any other. Nevertheless, I really enjoyed this book.
April 19, 2014
A good book. Two take-aways for me was: the added role of the complementor (not a customer, nor competition, but someone who complements what you offer!). And mapping your business in a value net, can be a good tool for understanding your business and all the players in it. The book has outdated examples since it was written in 1996.
October 7, 2018
Co-opetition opened up an a whole new playing field of game-theory based business possibilities that I had never even considered before. I've dogeared tons of pages throughout this book so I can come back to it over and over again. It's a book I'm going to keep around as a guidebook as I continue to grow my company.
December 14, 2010
Lighter on the game theory than I would have liked, and a little narrow/random in its discussion. Also, it makes a few predictions that prove wrong in history, so it's hard to avoid losing credibility.
November 15, 2011
This was a very interesting read. Opened my understanding about the business world - don't know much about business but I can see how our world could improve if we thought more about co-opetition than competition.
July 27, 2008
Booooooooo
Read
November 7, 2014Interesting read.
March 29, 2013
A should-read book on competition for knowledge workers who want to be in executive role and entrepreneurs.
July 31, 2013
Favorite quote: "Business is cooperation when it comes to creating a pie and competition when it comes to dividing it up"
March 22, 2015
The book tackles the heated issues between cooperation and competition.
Must read for strategic thinkers.
Must read for strategic thinkers.
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